Thoughts on the Jedd Gyorko Extension

Often as fans of a team, we end up (consciously or not) viewing the financial side of baseball from the owners’ perspective. We worry about how much our favorite team – the Padres of San Diego in this case – spends on its players, not because it’s our money on the line or because we’re worried about our team’s owners’ upcoming yacht payments, but because we want our team to spend its available dollars as efficiently as possible. In the end, after all things even out, efficient spending should correlate to more wins. And we as fans are generally in it for the wins.

*Gyorko and the Padres signed a six-year, $35 million extension last Monday. Effectively, it’s a five-year extension (plus the option) as Gyorko’s 2014 salary remains unchanged. The deal includes a $13 million option and $1 million buyout for 2020, both of which can escalate slightly based on performance. If the option is picked up, the deal will buy out two of Gyorko’s free agent years.

This kind of contract, while generally referred to as “team-friendly,” has become fashionable in recent years because it is beneficial to both player and team. The player sacrifices potential earning power for security, passing up the high risk/high reward year-to-year contract approach in favor of a safer, guaranteed deal. The organization, on the other hand, accepts all of the risk by guaranteeing a substantial amount of money to a young, relatively unproven player, but makes out like bandits if the player continues to produce at a high level throughout the length of the deal.

If Jedd Gyorko turns into Khalil Greene Version 2.0 or if Chris Archer, for example, takes up permanent residence at Dr. James Andrews’ office, the Padres and Rays, respectively, are still on the hook for a relatively large payout to each player. If those players continue on their expected development path (or surpass it), however, their teams will save a bunch of dough and keep their young talent in town for longer than the standard six-plus service years.

Back to the owners’ perspective: Despite the team-friendly nature of these deals in general, could the Padres have overpaid Gyorko when comparing his deal to other recent extensions or to his expected future value? Dave Cameron thinks so. Cameron makes the argument that Gyorko doesn’t have the star power or potential earning power to warrant this kind of deal:

Gyorko is a good player, just like Maybin was a good player and Luebke was a good player. You want to have these guys on your team. It’s not clear, however, that any of them were headed for the kinds of big paydays that make buying their futures in advance a good idea. When you sign a young player to a long-term deal, you take on the risk that he’ll get injured or just never develop into more than what he already is. To make the deal work for the team, you want to try to lock up potential superstars before they become superstars so you can keep them around at non-superstar salaries.

Cameron continues:

That doesn’t make it a bad contract — $35 million in today’s baseball economy is a drop in the bucket, even for the Padres — or even one the Padres will regret, but until San Diego starts developing real franchise players again, these early career extensions won’t work out as well for them as they have for the rest of the league.

The following chart shows Gyorko’s expected future value over the course of the deal, as projected by Baseball Prospectus/PECOTA’s long-term forecast, along with Gyorko’s actual salary and his estimated salary had he taken it one year at a time:

Year

Projected WARP

Actual Salary

Estimated Salary

2015

2.0

$2M

$1M

2016

2.7

$4M

$4M

2017

2.9

$6M

$10M

2018

2.5

$9M

$12M

2019

2.2

$13M

$19M

2020

1.9

$13M (option)

$17M

Total

14.2

$47M

$63M

*I used Chase Headley’s arbitration-eligible season figures as a baseline for Gyorko’s, and adjusted them for inflation. I realize this is complicated by Headley’s former Super-Two status, not to mention his breakout 2012 campaign, but it seemed like a solid enough comp. Gyorko’s two free agent years were estimated by taking his projected WARP and multiplying it by an inflation-adjusted dollars/win figure.

Based on these estimates, this extension will save the Padres around $16 million – an estimated $63 million had they taken the year-to-year route minus the $47 million they’ll actually pay Gyorko if the option is picked up. Does that mean that Cameron is wrong, and that the Padres didn’t overpay Gyorko?

Not necessarily. The very nature of the long-term extension for the young, semi-unproven player is that the player sacrifices some potential salary for a guaranteed amount, and that, if everything goes as planned, the team will save money in the end. The real comparison here needs to be to similar players who have signed recent deals.

As Chase at Hank’s Padres notes, there are a couple of recent deals – specifically, the six-year, $31 million deal handed out to Starlin Marte in March and the seven-year, $58 million pactAndrelton Simmons signed in February — that provide a pretty decent benchmark which to compare Gyorko’s. All three players had between one and two years of service time when they signed their extensions and all three were set to reach free agency in 2019, though only Simmons had a shot to reach Super-Two status. Here’s how their extensions compare:

Year

Gyorko

Simmons

Marte

2014

$.5M

$1M

$.5M ($2M bonus)

2015

$2M

$3M

$1M

2016

$4M

$6M

$3M

2017

$6M

$8M

$5M

2018

$9M

$11M

$7.5M

2019

$13M

$13M

$10M

2020

$13M (option)

$15M

$12.5 (option)

2021

$13.5 (option)

Marte’s deal is the most team-friendly of the trio, as it’s the cheapest overall and buys out an extra year of free agency (when you include the options). Simmons’ deal is the most expensive, but he’s also, thanks to all-world defense, far-and-away the best projected player of the three. PECOTA only projects Marte to be worth 10.6 WARP over the length of his deal (2014-2021), while it projects Simmons to be worth a whopping 33.1 WARP from 2014-2020. Gyorko, as we outlined above (with 2014 added in), is projected to be worth 16.5 WARP over the same time period as Simmons. It’s easy to see that the Braves are the clear winners here, but it’s also hard to argue that Gyorko’s deal is any less team-friendly than Marte’s, even after considering that extra year the Pirates are getting.

It’s pretty clear that the Gyorko extension wouldn’t rank as one of the most club-friendly deals signed over the past couple of years, but at the same time it’s not clear that it’s an overpay. Out of the handpicked three that were signed this offseason by players with a similar amount of service time, and based on PECOTA’s* long-term forecast, Gyorko’s deal is superior to Marte’s even though that one was almost universally lauded.

*Other projections systems, like ZiPS, are higher on Marte, which entirely changes the equation and shows just how tenuous these types of arguments can be. Changing your projection system of choice can ultimately distort your previous take on a deal, which is just another wrinkle complicating these business-of-baseball type articles.

***

And now for this self-congratulatory interlude …

Back in March, I wrote a “contract extension guide” in which I suggested that the Padres sign Gyorko to a seven-year, $50 million extension. In the comments, I broke down my projected (read: guessed) deal year-to-year:

While Cameron may be right to a degree – this Gyorko deal isn’t a Mike Trout or Andrelton Simmons variety steal – it still appears to fall in line with the more run-of-the-mill group of extensions. But what’s more important here than whether the Padres overpaid Gyorko by a few million or failed to tack on another free agent year is that the Padres are back into the extension game.

The Chase Headley contract saga has yet to play out in full, and it in fact took yet another turn just a day after the Gyorko extension was announced, but it appears that he’ll be headed elsewhere in 2015. The trio of aforementioned smaller deals the Padres struck with Maybin, Luebke, and Hundley haven’t worked out as planned, but the Padres are (finally) moving forward. Gyorko might not be a Simmons-esque caliber star, but he’s projected as a 2-3 WAR player, he had an impressive rookie campaign, he’s a homegrown product and one of the lone bright spots from a now-ugly looking 2006-2010 draft period, and he has every right to claim the “Best Padres Player Since Adrian Gonzalez” crown.

The good news is that there’s an increasingly crowded group of Padres in that discussion, led by Gyorko, Everth Cabrera, Andrew Cashner, Yasmani Grandal, and (soon enough) Austin Hedges. And with Gyorko’s extension now in the books, there’s a renewed hope that more deals will follow and that the Padres will start to build around a young core for the long haul, and not just send players through a revolving door out of town once they become too expensive. After years of front office shakeups, false promises, and all-around uninspiring baseball, it’s about time.

Back to the owners’ perspective, once more: While efficient spending is important, there are other factors, like PR and fan support, that may be tougher to quantify but ultimately play a crucial role in the long-term health of a franchise. Making an early commitment to Gyorko probably wasn’t necessary, and guaranteeing him $35 million when he’s still five years away from free agency may have been slightly aggressive, but there’s no better way for the Padres new ownership group to rebuild a fractured relationship with the fan base than to make aggressive moves committing to a young core. If the Padres overpaid to extend Gyorko, at least it’s a move we can believe in.

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Sac Bunt Chris

The best Padre hands down from after Adrian was traded is Chase Headley at 13 fWAR. After that it falls to, of all people, Chris Denorfia at 6.9 fWAR, matched at 6.8 fWAR by Will Venable. Incredibly, the highest pitcher on that list is Eric Stults at 3.4 (!!!) fWAR. What an awful period.